project report€¦ · web viewabout tesla and tesla supercharger network. tesla, inc. is an...
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About Tesla and Tesla Supercharger networkTesla, Inc. is an American automaker, energy storage company and solar panel manufacturer based in Palo Alto, California. Founded in 2003, the company specializes in electric cars, lithium-ion battery energy storage and residential photovoltaic panels. CEO Elon Musk said that he envisions Tesla as a technological company and independent automaker, aimed at eventually offering electric cars at prices affordable to the average consumer [1]. To this end Tesla released its most affordable car yet, the Model 3 in July 2017 [2] to add to its existing lineup comprised of the Model X and Model S. Tesla targets to produce about 5000 Model S per week from March 2018[3] to cater to the 455,000 net reservations made by August 2017[4] which grew at 1800 reservations a day at an average [5]. Correspondingly, Tesla is expanding its Supercharger network[6], that is their 480-volt DC fast-charging stations which allow longer journeys for their all-electric vehicles (Model S, 3, X and the recently announced Tesla semi[7]), through quick charging of the vehicle's battery packs.
Gauging the market
Fig 1
Fig 2
With expected sales of electric vehicles (E.V.’s) to reach 8,000,000 in the USA and them accounting for about 5% of all cars on road (refer Fig 1) the market is clearly booming. More people than ever before are switching to E.V.’s (refer top right, Infographic 2, page1, in appendix) and thus this is an important segment for auto manufacturers. Tesla wants to further enhance its position in the market (refer Fig 2) by announcing the affordable Model 3.
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Barriers to entry
Fig 3 Fig 4
As pointed above the major barriers to entry are price, range, charging capability (i.e. time) and maintenance cost (refer Fig 3 and Fig 4)
Target audience and how to attract themTo move forward and expand its market footprint, Tesla needs to target young, eco- friendly, tech savvy, professionals in their mid-20’s to mid-50’s. Financially speaking the most lucrative segment is the one with annual incomes between $50,000 to $100,000. Most new customers have owned a vehicle before, which they financed and are now prepared to spend $30,000-$40,000 on an electric vehicle. Geographically, the top 20 cities are targeted to cater to the above identified audience. Additionally, superchargers have also been suggested along busy interstate highways.
Mileage, price, availability of financing options and after sales service are factors which highly influence a customer’s decision to buy an electric vehicle. In light of this building an expansive supercharger network and charging a nominal fee from the customers to offset the cost of the Model 3 seems preferable. The network should be laid out to ensure that a Tesla owner should not run out of charge (after a full charge) on a route before reaching the next supercharger. For optimization, multiple supercharging stations within the driving range of a Tesla are to be avoided.
Strategy to place SuperchargersTo choose a city within a state, we filtered states and cities on the following metrics- Population (more is better), Per capita income (more is better) and EV sales (more is better). For selecting a location within the chosen cities, we chose important urban centers with large footfall (tourist destinations, malls etc.) preferably connected to an Interstate or at least close to one. We then installed Superchargers in these centers year after year to cater to Tesla customers.
2Population
Per capita
income
EV sales
Budgeting
Planning Horizon 5 years Since budget provided is for 5 yearsMARR 10%
(Refer to graph, Tesla’s Gross margins with R&D are 10%)
Inflation 2% Current CPIUtilization (weekdays, weekends)
10%, 15% (growing @ 5% per year)
Based on our observation of Supercharger station in Boston and discussion with Tesla representative
Cost of Electricity for 400kW
Year $/kWh $/h Weekday Cost Weekend Cost Cost/Year
2018 0.1734 69.36 $166.46 $249.70 $69,249.02
2019 0.1769 70.75 $169.79 $254.69 $70,634.00
2020 0.1804 72.16 $173.19 $259.78 $72,046.68
2021 0.184 73.61 $176.65 $264.98 $73,487.62
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EV sales
With given limitations of budget, space etc. choose to build 6 or 8 stalls
Preferably connected to Interstate or close to one
Choose important urban centers in optimum cities of the state
Break up of fixed costs 2012 2017 2018 2019 2020 2021
Labor: Electrical contractors 8 man-weeks $40,000 $44,163 $45,046 $45,947 $46,866 $47,804
4 high voltage/wattage converters $60,000 $66,245 $67,570 $68,921 $70,300 $71,706
8 stalls $40,000 $44,163 $45,046 $45,947 $46,866 $47,804
Site prep/paving $20,000 $22,082 $22,523 $22,974 $23,433 $23,902
Wiring Utility connect $20,000 $22,082 $22,523 $22,974 $23,433 $23,902
Site lease acquisition/legal $10,000 $11,041 $11,262 $11,487 $11,717 $11,951
Cost $190,000 $209,775 $213,971 $218,250 $222,615 $227,068
Annual Costs (recurring)
Lease $10,000 $11,041 $11,262 $11,487 $11,717 $11,951
Electricity $69,000 $69,249 $70,634 $72,046 $73,487
PW of annual cost $303,417.64 $305,198.61 $311,302.66 $317,526.13 $323,876.96
Total PW $513,192.99 $519,169.47 $529,552.93 $540,141.41 $550,944.55
Placing the Supercharger Stations
There are two main divisions in locations for supercharger station placement.
The urban stations cater to travel within the cities, people who stay in apartments and want to go long distances with initial charge. The highway stations cater to long distance travels, reducing time spent per charging station.
Budget division: -
60% Urban 40% Highway in 2017, 2018 in preparation for Model 3 customers
60% Highway 40% Urban in 2019, 2020 and 2021
Budget Provided Amount Urban Highway Event
2017 $20,000,000 $12,000,000 $8,000,000
Model 3 deliveries2018 $18,000,000 $10,800,000 $7,200,000
2019 $35,000,000 $21,000,000 $14,000,000
2020 $20,000,000 $12,000,000 $8,000,000
Tesla Truck deliveries2021 $40,000,000 $24,000,000 $16,000,000
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Linear Programming applied (refer to page 3in appendix)
States – States with maximum Tesla car sales chosen (Assuming trend for next 5 years repeats itself)
Objective function: Maximize total number of cars served
Constraint – Budget
Highways – Busiest and longest highways chosen, highways connecting states with max Tesla sales chosen
Objective function: Maximize density = #stations/distance (Assuming current placement is strategic and well-spaced out)
Constraint – Budget
Our proposal
The computed proposed number of supercharging stations in states are placed – Max per capita income city first
(Limiting to total 2 new installations / city)
The computed proposed number of supercharging stations in highways are placed – Widest gap first
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References
[1] https://www.investors.com/news/Article/600566/201202081933/tesla-motors-partners-with-toyota-daimler.htm
[2] Ida Akerstedt, Tesla Model 3 release date 2017: When is Tesla Model 3 coming out in the UK?, Jul 4, 2017 https://www.express.co.uk/life-style/cars/824678/Tesla-Model-3-release-date-when-coming-out-UK-price-Elon-Musk-electric-car
[3] Tom Randall, How the Model 3 delay is burning Tesla's other projects, Nov 4, 2017 http://www.dailyherald.com/business/20171104/how-the-model-3-delay-is-burning-teslas-other-projects
[4] Jack Crosbie, Elon Musk Finally Reveals the Number of Tesla Model 3 Reservations, Aug 2, 2017https://www.inverse.com/article/35011-tesla-model-3-reservations-number
[5] Seth Fiegerman, Tesla now averaging more than 1,800 Model 3 reservations a day, Aug 3, 2017 http://money.cnn.com/2017/08/02/technology/business/tesla-earnings/index.html?iid=hp-stack-dom
[6] Alan Ohnsman, Tesla Is Doubling Its Global Charging Network Ahead Of Model 3 Rollout, Apr 24, 2017https://www.forbes.com/sites/alanohnsman/2017/04/24/tesla-is-doubling-its-global-charging-network-ahead-of-model-3-rollout/#9420fd374bf9
[7] Fred Lambert, Tesla Semi met and then crushed almost all of our expectations, Nov 17, 2017https://electrek.co/2017/11/17/tesla-semi-electric-truck-specs-cost/
[Fig 1] Stephen Lacey, Everyone Is Revising Their Electric Vehicle Forecasts Upward—Except Automakers, July 17, 2017, https://www.greentechmedia.com/articles/read/everyone-is-revising-electric-vehicle-forecasts-upward.
[Fig 2] Niall McCarthy, Tesla Dominates The U.S. Electric Vehicle Market, Aug 14, 2017, https://www.forbes.com/sites/niallmccarthy/2017/08/14/tesla-dominates-the-u-s-electric-vehicle-market-infographic/#1f26119f7be4
[Fig 3] Felix Richter, Can Falling Battery Prices Push Electric Cars?, Jan 23, 2017, https://www.statista.com/chart/7713/electric-car-battery-prices/.
[Fig 4] Evelyn Rusli, Don't Tell Tesla: In 2020, Sales of Electric Vehicles Will Be Less Than 8% Of The Global Market, Oct 27, 2010 https://techcrunch.com/2010/10/27/electric-vehicles-jdpower-tesla/
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APPENDIX
Infographic 1: Relative position of the USA relative to other countries (courtesy statista.com)
Infographic 2: Target audience analysis (courtesy reneweconomy.com)
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Infographic 3: Areas where EV’s are taking off (courtesy insideevs.com)
Infographic 4: Chargers per million people in different cities (courtesy fuelfreedom.org)
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Table 1: Suitable locations within cities
Sr. No. State Cities Mean
IncomeTotal Tesla Sales
Where to construct and why How many?
1
California
LA $55,909.00 257,937 LA International airport; second busiest airport in US 2
2 Long Beach, LA $55,909.00 The Pike, one of the most famous and visited
amusement parks in Long Beach, US. 1
3 San Diego $63,400.00
Gaslamp quarter since it is close all the tourist places and I-94 highway. Chula Vista- closer to the junction of highway 805 and 54
2
4 Illinois Chicago $48,000.00 11,293Lincoln Park, due to proximity to various scenic places and one of the best neighborhoods to live Hyde park due to proximity to I90 and I94
2
5
Texas
Austin $55,216.00 17,031
Austin lies b/w Houston, Fort Worth and Dallas. Therefore, construct one on I-35 in Georgetown instead of the one proposed at Cedar Park and one in downtown
2
6 Dallas $64,000.00
There are proposed plans for superchargers but no unit installed yet. Reason for setting up an entirely new station recommendation- routes like 20 45 35 are connected at this delta. Near Dallas World Aquarium
1
7 San Antonio $55,083.00 On market street, connecting major parts of the city 18 Fort Worth $59,175.00 Close to highways 35W, 121, 377, 280 and 347 2
9Washington
Seattle $80,000.00 21,647Downtown- close to tourist places like aquarium, gum wall, Seattle art museum etc. Close to I-99 highway
2
10 Washington D.C. $56,500.00 Downtown. Hub of all important business activities 4
11 North Carolina Charlotte $53,274.00 6,251 The Ritz-Carlton hotel, the center of the city. City connects routes 77 and 85 1
12 Pennsylvania Philadelphia $32,000.00 8,806 At Salamanca in between Erie to Corning on I-86 (near Allegany State Park) 1
13 Massachusetts Boston $78,800.00 9,118 Boston Logan International Airport, Quincy, Salem, Burlington (Densely populated areas all day long) 4
14 Colorado Denver $62,760.00 8,523 Boulder, near Long peak and Denver city in between I70 and I25 1
15Ohio
Cincinnati $34,000.00 6,260 At I71 off central business district (web of roads adjoining to Ohio river crossing) 2
16 Cleveland $26,179.00 At junction of I480 and I71 near Cleveland Hopkins International Airport 1
17 New Jersey Newark $34,000.00 11,584 On Market Street, near Newark Penn Station (near Essex Freeway I280) 1
18 Hawaii Honolulu $70,093.00 5,306 City Centre because Hawaii is in top 20 EV car buyers but no supercharger station yet 1
Sr. Location State Where exactly Reason How
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No. Many?
1 ElyNevada
Connectivity to Salt Lake and Utah Largest city of white pine county 1
2 Las Vegas - Hotels -3 Fallon I50 and I95 junction Provides connection to Ely and Reno 1
4 PortlandOregon
Connectivity to Washington routes Largest city 1
5 Salem Off I5 Proximity to Portland port 1
6 BighornMontana
Old Highway 10, off I94 Equidistant on I94, no current installations 1
7 Miles City Off I94 Near Miles City Municipal Airport 18 Glendive I94 Equidistant on I94, no current installations 19 Dickinson
North Dakota
I94 Equidistant on I94, no current installations 110 Bismarck I94 Equidistant on I94, no current installations 111 Jamestown I94 Equidistant on I94, no current installations 112 Fargo I94 Equidistant on I94, no current installations 113 Delta Utah Near Fool Creek Peak Improves connectivity from Ely to Red Canyon 1
14 Sioux City Iowa I29 Improves connectivity to Kansas City from Fargo, North Dakota 1
15 Portland Maine (Port) Provides entry to Boston will help truckers on I295 and is also close to Portland international airport 1
16 Casper Wyoming Cheyenne-Sheridan, Wyoming, off I25 No current installations 1
17 Panama City Beach Florida Instead of Destin Florida to improve connection to beaches on way, ports,
I10 1
18 Elizabeth town Kentucky
Princeton and Lexington, at the junction of I65 and I75
Vicinity to cluster of highways 1
19 Clayton New Mexico At the junction of I25-i412-i87
Off skirt to many cities including Albuquerque and Amarillo and Colorado Springs 1
20 Parkersburg West Virginia
On I77 in between Charleston and Cambridge
Connects Cincinnati with Washington 1
Table 2: Suitable highways
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